Entrepreneur
Article

The Stickiest Situations

By Andrew Neitlich

Three items in today’s blog:

1. Vacation. I’m going on a much needed vacation until July 5. No Internet, no voice mail, no email. Just time to relax and recharge. Part one of today’s blog is a reminder to any of you who are stressed out and feeling unbalanced to do something to recharge. Vacation? New hobby? Long walks? Serious exercise? Meditation? Whatever works for you. It pays off ten fold.

2. Reading material. If you want some good reading material during the week, there are plenty of free, no-registration articles about marketing IT services that you can access at http://www.itprosuccess.com/free_resources.shtml

The five most popular include:

http://www.itprosuccess.com/articles_new_research.shtml

http://www.itprosuccess.com/articles_free_development_plan.shtml

http://www.itprosuccess.com/articles_seven_ways_to_differentiate.shtml
http://www.itprosuccess.com/articles_competitive_bidding.shtml

http://www.itprosuccess.com/articles_nineteen_errors.shtml

3. When I get back, I’d sure be grateful if this post were loaded with comments from you about the following:

What has been (or is) your toughest business development situation? Maybe it was difficulty closing a client, or reaching prospects, or keeping a client, or asking for referrals.

Whatever it was/is, post it. You have nothing to lose and we will all learn something from your experience.

The week of July 5, the blog will focus on how to handle those sticky situations.

Best case study posted gets a free (normally $195) manual, so don’t hold back.

Have a great week!

  • http://www.redcow.ca/ Ray Oliver

    I am cofounder of a small company that specializes in web application development. We began in the real estate industry, but have since moved on to offer products for other sectors as well. One of my partners is a prominent real estate agent, and through him we learned that the local real estate association was accepting tenders for building a secure web site for its members.

    Before that, all of our clients had been much smaller, and ths was new territory for us. So we put a lot of effort into our proposal, working off of very general specifications. My parnter met with the associations executive director on numerous occasions to discuss the project, and thanks to our real estate agent business partner, we had an inside ear to the proceedings.

    Unfortunately for us, the association had been burned in the past as their previous web site had been designed by a company that was now defunct and the last thing they wanted was to have that happen again. Proving our abilities was the easy part; having to convince them that we would be around after the project was completed was the killer.

    If that wasn’t bad enough, the association was having other problems that I won’t get into, thus delaying the project several times. Additionally, some of the board members had unfounded, preconceived notions about existing software packages that were far more expensive than what we were proposing.

    It was a long and tedious process, and though we came close to giving up several times, we got the project in the end. I think a key factor to that was the fact that we remained in communication with them over the eight months between our proposal and the date they accepted it.

    To convince them that we are not some fly-by-night dot-com that is going to go under in a few months, we explained to them that because we have a good number of small clients who pay us every month, we can quite literally stop accepting new clients and still remain profitable. Recurring income is a key aspect of our business plan, and thus will be a major factor in our longevity.

    Another key to getting this project was our inside man, the real estate agent. Having an experienced professional on board gave us a lot of credibility. I’m sure it was his testament to the solidity of our company that got us the project.

    So to conclude, when you are having difficulty securing a large client, do the following:
    1. Remain in communication with them to express that you are serious about the project.
    2. If you are a small/new company, qualming the client’s fears about your longevity is important.
    3. Having a professional relevant to the industry on your team can go a long way to establishing credibility.

  • aneitlich

    Great start!

    Keep them coming. I’d like to see at least 20 posts on returning.

    Everyone reading this must have a sticky situation to report. Whether it has been resolved or is currently in progress (or you wonder what you should have done differently), please post your experience now!

    Okay, now off to vacation.

    Best,

    Andrew Neitlich

  • http://www.thewebmonsters.com webmonster

    Hey Andrew,

    Have a good vacation, I just got back from Disneyland and had a much needed break myself. You post an interesting challenge and I would like to weigh in on it with one of my experiences. Here goes.

    My business partner and I decided a few months back to approach our local chamber of commerce about developing a website for not only the chamber but also for each of the members of the chamber. What I mean by that is that we would like to develop a system that would allow the business owners that were members of the chamber of commerce to create a “micro-site” (as we called it) for their business. This micro-site would basically be a one page site that business owner would have complete control over the content and be able to update and maintain the micro-site via our custom built content management system. We thought we had a very good plan and as a bonus, I was very acquainted with the new president of the chamber of commerce so I figured I would at least get a shot to pitch our idea.

    Well I was right, we were invited to present our plan to the chamber board members and try to get them to agree to our proposal. The basic concept we came up with was to provide a free website to the chamber (hosting included) in exchange for a small monthly fee from each of the businesses in the chamber for listing all the businesses in the directory on the chamber website that was linked to their micro-site. So there was no cost to the chamber as an organization but a slight increase in annual dues for the current members. We decided the best way to do the pricing was to go along with the pricing structure that was already in place for the chamber members which was based upon how many employees that business had. This I believe is how many chamber of commerces handle their annual dues. For example, if a company had only 1 employee, the chamber dues were very low (lets say $100/annually) and if your company had 200 or more employees, it might be $500/annually. This is just an example of how the payment scale worked. So what we did was come up with a monthly figure that correlated with the sliding payment scale already established by the chamber. In our case, there was 5 levels of members and we decided to charge $1/month at level one and each level upwards would increase by $1 more a month. So the small businesses would pay $12/annually for their micro-site and the larger businesses would pay $60/annually.

    I realize some of you may be EXTREMELY shocked by the low amount of money we were willing to do this for but let me explain. Our thinking was that we really wanted to make this sale and we figured if we kept the price very low, we would have the best chance at getting the chamber to agree to our proposal. Our plan was to build the system and get everything set up for our local chamber and then take the same business model to neighboring communities and do the same thing. Once the system is in place, it will be very easy for us to turn this around for other communities with little effort and we will be getting a steady flow of cash each month. Our local chamber of commerce is very small so we are not going to be retiring anytime soon based on this income, but our long term goal is to take this to other larger communities and offer the same system and obviously make much more money every month since they will have many more members paying those small fees. Our thinking is that even $12/month will add up to a decent amount of money (split between 2 of us) if there are hundreds and hundreds of businesses.

    Well our chamber agreed to go with our plan so now we are in the process of building everything which is great but at the time of the proposal, after seeing the reaction of the board members, I wanted to kick myself for pricing our service too low. Again, we really wanted to get this job so we made an offer we felt they could not refuse. I now feel that we could have priced things higher and stood to make more money but we were looking at the long term goals of the concept and really wanted make this sale. I guess my biggest regret on this proposal would be that we could have charged more of a monthly fee and probably still have gotten the job but we really had no way of knowing that. We definitely know now that we can get more money for this type of service so hopefully this will ultimately pay off down the road. Knowing how much to charge is tricky business.

  • http://www.rebornstudio.com optimus_prime

    My problem is the following: lately I’ve been getting several leads through my existing clients (referrals) – but all of the leads I am getting are cheap clients. I don’t think I’m pricing myself too high, I think I’m just attracting the wrong type of clients. How do stop attracting clients from the low end of the market and start attracting better clients?

  • wdm

    I’m facing something similar to webmonster where there is no question the client wants and sees his business needs our services. Thus I’m afraid of undercharging him for the service.

    I’ve increased the price on a job for a previous client by a third on what i was going to charge them before completing the proposal and was told by them that our price was very reasonable.

    I worry that I’m coming in to low and selling us short. None of our work is based on a bid. All of it so far has been referal based.

  • http://www.revmedia.com dhecker

    This is more of an ethical problem but here goes:

    I had a client who needed an online store to be built, for a new business they intended to launch. They had very unrealistic projects for traffic, conversion, and revenues, and had implemented no systems whatsoever for customer serivce, bookkeeping, marketing, etc. The ‘business plan’ was to launch the website, and watch the money roll in! I accepted the project because the client was a friend, but I felt awkward because I knew that the business would likely fail as a result of insufficient business planning and best practices.

    Since then, I’ve been faced with the same issue a few times.

    Do you accept work from a client knowing that, no matter how successfully you complete the work, the overal objectives of the client won’t been met because of their own internal issues?

    On one hand, business is business. So, why not do what a client wants (and is paying) you to do? So long as you do a good job what difference does it make whether it’s worthwhile for them or not?

    On the other hand, if you are 99.9% sure that the client won’t get any satisfaction, there is an ethical obligation to share this concern with them. Right?

    Well, this happens from time to time. Generally, I turn down clients if I think that they are going to be dissatisfied regardless of the quality of my deliverable – usually because they are requesting that the wrong tasks be performed and are unlikely to be successful in their larger objective.

    Recently, I was asked to bid on a similar project – a fanciful dotcom plan with virtually no business, marketing, operational, promotional, or technology plan. They DID plan to make millions of dollars on the millions of visitors, but there was no detail about how.

    My solution: I informed that client that due to the lack of detail provided, there was no way I could estimate this kind of project. Furthermore, I told her that I would stay away from any group that DID offer a fixed-bid with such a skimpy (5 pages of powerpoint) specification. Then, I offered her a more reasonable ‘next-step’ which was a 6-week consulting gig geared towards helping her flesh out some specifications and getting them into a document. This way, I claimed, she would spend a bit of money up front, but would then be in a position to send a more realistic RFP out and get more realistic bids.

    During our ‘discovery’ process, it became pretty obvious that there was considerable planning to do. I would ask questions like, ‘what accounting program will you use, let’s talk about integrating the website into it’, and she realize how many things were missing.

    Overall, it was an ethical middle-ground where I was able to make some profit without charging her for work that won’t do her any good. Still, it’s a tricky situation and I continue to receive calls from potential clients who are ready to spend money on an ill planned solution or application.

    I’m curious how others handle similar situations.

  • http://illuminosity.net/ illuminosity

    I’m not sure this fits exactly into what you’re asking for, Andrew, but I’ll fire away anyway.

    Currently I’m going about trying to set-up a web development business. I’ve been reading trhrough your material and a lot of it is very helpful, but it’s also highly oriented towards those who’ve already had clients. A large amount of the things you recommend doing, eg using referrals, testimonials require having had previous clients.

    How is one supposed to go about attracting the initial clients they need before they can use them to engage in the tactics you recommend?

  • wdm

    Another business development problem is getting over what I think is called low pricing esteem or something like that.

    I’m feel I’m at that point now. What methods could be used to get out of the hole and start setting prices where they should be?

    Does it just take time as you build confidence with each job?

  • Anthony Ferguson

    I’ve been trying to get into web development as my own start-up business here, in between uni and regular work. Its been fun – certainly keeps me busy. All the same, I haven’t had a lot of work.

    I was looking foward to two jobs for one person, however. A friend of mine got a job with this man some months back, and discovered that he needed a website for his new business (which my friend was working with), and an updated website for his main business.

    My friend also found out the amount this man was currently paying for his existing website – I know its frowned upon to mention pricing on the sitepoint forums, so I won’t name a figure here either. The price was extremely high, however. Over a year, the amount would be well into the thousands – this is for site maintainance and hosting. Let me stress that the site in question is EXTREMELY basic.

    Naturally enough, although I winced when told the price, I was very happy – I was surely a much better option than that! On top of the two sites would be an ongoing fee for hosting the site – at a much better price for the client than what he’s currently paying!

    However, I’ve had no contact with the man in question. I recieved instructions, through my friend, to do up proposals for both sites and send them off through my friend. Ever heard the saying, don’t mix friends and business? How very true.

    For around 3 months now, my friend has had a copy of the proposals in his hands, while I wait for him to check them over and send them off. He’s been busy, however, so I’ve been patient. I’ve been that way myself, with uni and all. Now, its uni holidays. I have time to devote to other projects.

    I’ll elaborate on the new business which my friend is involved in – its a cleaning company. Nothing overly special or anything, but the work is nasty. Tonight my friend’s gal called up, asking if I could come to work with them. Well, I had plans, the work is terrible, and plays havoc with my injured back – so I declined.

    As soon as I said no, I heard something that sounded like the phone being taken from this girl, and then my friends voice: “Thanks a lot, MATE. And you can forget those contracts with “, littered with swearing. Ouch.

    After this, I was upset. Fair enough, I would think. I spoke to another good friend of mine – who, coincidently enough, works with my sort-of-friend. It would seem that the boss, who the contracts were originally for, had another idea as well – a web-based storefront of some sort. A project I would have loved to work on. My sort-of-friend, however, discuessed this with my other friend and said “well, I could tell so-and-so… but screw him, I’ll learn how to do it myself and keep the money.” Double ouch.

    And so I sit here, even more upset, wondering exactly what I’ve done to deserve this – and promising myself to avoid mixing friends and business in the future. Being introduced by a friend, I figure, is great – working THROUGH a friend is most certainly not.

    What I SHOULD have done is organised a meeting or a lunch, anything, between myself, my friend, and the client – and from there on, kept open lines of communication directly with the client.

    Enjoy your vacation, Andrew, and well done on the column! Please, keep it up!

  • kf

    Like illuminosity, I was also struck by the fact that an already large and successful outfit has previous clients to work on. I suspect my biggest problem will be to give confidence in my expertise without a page of endorsements and big name examples to refer to.

    I have my first (for me) biggish lead , the manager of a property rental company and, on the face of it, she is not delaying a decision for any of the reasons referred to in the kit (though they may be the underlying reason for not jumping at the offer straight away!) but because she is overworked and has had a lot of staff changes to cope with. The hopeful part is that she feels guilty because she knows she has been putting off making a decision and obviously feels enough of a relationship with me for this to matter. Does she opt for the safe because known HTML site that they currently pay to get updated weekly or my dynamic solution which will save money and allow instant updates but mean change (=risk?) ?

    Rightly or wrongly I have opted for developing the long term relationship since her hesitation is almost certainly based upon my credibility. I’m a one man concern and though I can demonstrate that the stuff works will I continue to be around when they need me?

    I suspect in this regard the Kit advice is correct. The key issue in making a buy decision is rarely a matter of price but much more likely to be a matter of perceived value. This is made up of many components including continuity and the belief that there will be a seamless transition from the present site to the new one. This is not usually an intellectual decision when buying but a gut feeling and the established company with a proven track record wins hands down on this score. How do we start-ups compete?

    Incidentally the lead was generated by searching for static websites that could do with being dynamic and then writing a letter to the company concerned. One out of an initial three companies contacted responded with a phonecall that resulted in a meeting and invitation to quote. Not a bad return if I can secure the job!

  • MarkF

    Hi,

    my stickiest moment is right now!

    I’ve been doing development as a one-man show for a year or so now, alongside my main job.

    Haven’t really had a lot of good fortune in getting new clients – existing clients love the service I give, but when I ask for referrals, nothing happens.

    I’ve placed a few local ads & I just got my first response.

    I went to see this guy who just blew me away!
    Every other word was a swear word – he demanded this & demanded that – he didn’t have any kind of brief or idea – just that he wanted this online shop yesterday!

    Anyway, to cut a long story short, I just don’t like him, asides from the language, his attitude stank – I could see him becoming the client from hell!

    BUT – I really need the money!
    I lost my job a few months ago & every penny counts.
    BUT – I don’t want to do business with this guy – I feel that I should be able to choose who I do business with..

    Anyway, I did a detailed 14 page proposal for him – lots of useful info for free.

    He called me back, with more bad language to say that my quote & timeframe were different to what I said at our face-to-face meeting (I made it clear to him that they were just ballpark numbers).
    He said he was off to get more quotes (I won’t repeat what he said next!)

    That was weeks ago & I haven’t heard anything from him since – till today.
    I just missed a call & checked voicemail – nothing, but I checked the calling number & it was him.

    The dilema – if he wants me to do the work, do I agree or do I fob him off in some way??

    Thanks,
    Mark

  • s_spice113

    Hi MarkF,

    I have found that sometimes it is better to not deal with the customer that you get a vibe from.
    I had a customer that was referred to me by one of my best customers. My first impression was that she handled and carried herself very unprofessionally and just all around a felt uneasy about her. I decided to go ahead and work with her though because I needed the money and as I said she was referred to me by one of return customers. The customer made several appointments with me and broke them. Her payments were inconsistent. She had big demands but little money. I spent more in time and phone calls listening to her sob stories than the job was worth. She was my customer from hell.
    I find that some times it cost you less to not deal with the person especially if you can tell that they will be difficult right from the very beginning.

  • thor@iway.na

    Hey there,

    In a somewhat similar vein with respect to MarkF, I also find myself in a rather uncomfortable position with a current client but to avoid getting ahead of myself, I will start from scratch.

    I am a software engineering student (final year) with a double major in computer science and information systems. I have been teaching myself web development for more than two years now and have become one of the better such individuals in the country (Somewhere in Africa) and thus decided to start my own business doing such work as web development, webmastering, software engineering, domain reg., hosting sourcing (along with setup and admin), etc. With all my tuition in systems analysis and design and the like I have come to have a good all-round enderstanding and application of proper requirements elicitation, project specification, needs analysis, project management, etc. The biggest problem here (In Africa) is that there is always a lack of the other side of the coin e.g. the company does excellent analysis, recommendation etc. but knows nothing about proper web development principles etc. and vice versa. In this respect I have been able to generate quite a lot of referral job from existing clients (You know the story: Word travels fast in small places) because of always over-satisfying my clients so that I become the choice for future projects by default.

    This brings me to my problem (first ever encouter with such a problem by the way). I recently developed an entire web site for a client. I used to work for the company years ago (back in the 90’s) but not in the line of anything technical. I was approached to quote for a website for them and I did so, only after a lengthy process of doing fact finding, requirement elicitation, etc. and the quote was accepted. I then spec’ed out the project according to the budget available and the specifiation (to avoid scope creep) were approved and development commenced. The project went well with the exception of lack of interest in the project from the client’s side and my having to beg for input from the client with respect to desired content and the like. I use an iterative approch to development in that each stage of development is presented to the client for approval before moving ahead with subsequent stages, which build upon previous, approved, completed stages such as interface development, functionality implementation, etc. Finally the project was complete and time came for the launch of the site and also payment of the balance due on completion (I charge 50% non-refundable deposit on all projects).

    I was requested to be present at the official launch of the site where the press was present along with other relevant and influential folks. It was my understanding that my presence was required merely to fill a seat but upon my arrival it came to light that I would have to actually make a presentation of the site to all present. I did not have a problem with this as the project was an exemplary piece of work and if I could have a bit of a brag, so be it. However, the site was to be projected on a huge screen for folks to have a browse but it turned out that the hardware available was completely insufficient and I was forced to get my personal hardware from the office to do the presentation. All this went off well and I could not see myself charging for this incident and viewed it as another “value added service” to the client.

    The real problemt reared its ugly head a day after the launch (and two days before final payment was due) when the client requested ameeting with me and I obliged. During our meeting the client expressed his dissatisfaction with the fact that he and members of his staff could not make updates to the site themselves and that he considered having to turn to me for such updates to the site’s content, a type of blackmail. Obviously I was shocked beyond belief because it was specifically agreed that due to the busget constraints, the site will be initially developed in such a way that non-technical and non-qualified people would not make changes but that they (the client) would accumulate desired changes and have me do them monthly for a nominal charge. The fact that was explained to this client, which he also fully agreed to, was that the site uses PHP, JavaScript, the PHP/MySQL API, CSS, and HTML all in one, working together to deliver a proper site and that not just anyone could fiddle about with the code (ingnoring the copyright issues for now) because of its intricacy and the risk of breaking it. Those of you who are developers themselves know how quickly and easily intricate site code can be broken. The site was intended to be as browser independent as possible and to perform regardless of the pathetic bandwidth available in the country. All in all, the product that was delivered to the client was bloody excellent and way better than any other suchweb site in the country. I mean, what developer designes a website to be completely owner manageable by default? This takes loads of extra planning and development, which, in this case there was no budget for.

    Now I am not sure whether I will receive the balance of the amount due for the project because the client persists that I ripped him off even though I deirected his attention to the exact clauses in the signed contract contradicting his claims.

    What to do now? According to the contract I have the full right to repossess all the creative, code, etc. I developed if payment is not made, on time or to charge up to 100% interest on all outstanding amounts per month while leaving the site in operation. But I do not want to go to such lengths. How do you handle such a turn-coat client? I have the Web Design Business Kit which tells and sort of instructs a zero-tolerance toward such deadbeat clients but I will rather bend over backward a little more, keep the client happy, resolve the issue amicably, and keep doing business with them than both of us having sour grapes about each other. I have absolutely refused to reprogram the site (for free as the client demands) to allow for complete editing and update control of its content by the (non-technical) client and his staff because I feel that doing this without proper remuneration will label me a push-over and cheapen my services.

    Again, what to do…

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